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Transparency

#PlanHacks

THE ECONOMIC IMPACT OF OUTCOMES

SHOPHEALTH 2.0

Free Market Pioneer

DPC and Self-Insured Employers

KIM JONES • HEALTH CARE BROKER

DPCs: Congress and HSA

LIFESTYLE-FRIENDLY CARE FOR THE 21ST CENTURY

THE SIMPLE FIX ISN’T SO SIMPLE

Milliman U.S.

PREDICTABILITY V. VOLATILITY:

IT DOESN’T HAVE TO BE AN EITHER/OR PROPOSITION FOR EMPLOYERS

• FREE MARKET MYTH V. FACT • ILLINOIS FMMA: JOIN THE REVOLUTION • WHY BE INVOLVED IN YOUR LOCAL FMMA CHAPTER

FREE MARKET MINUTE “TRANSPARENCY”

THE VALUE OF THE FREE MARKET TO SELF-FUNDED EMPLOYERS

P. 4

P. 8

PRESCRIPTION DRUG PRICES BRIDGE A DIVIDED ELECTORATE IN ELECTION SEASON P. 24


SOLUTIONS FREE MARKET

HEALTHCARE

VOLUME I, ISSUE 3

CO N T E N TS A premier educational asset and tool designed for employers and patients as Buyers of healthcare in the free market movement.

Jay Kempton, Jr. Dr. Keith Smith

When they met, the founders of the FMMA had something in common; a crisis of faith in the U.S. healthcare system and, within it, their ability to provide not just greater value in benefits, but better health care for patients. Our Mission: To promote, educate and support the Healthcare Revolution, which will bring about true healthcare reform, based upon Buyers and Sellers working together in a mutually beneficial way, without the interference of the government or valueless third parties.

ON THE COVER:

Milliman US’s Dan Freeman is Consulting Actuary with the Employee Benefits Health and Welfare practice in Omaha, Nebraska. Milliman is a leading provider of actuarial and related products and services. p. 20

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Free Market Minute

”Transparency” • Megan Freedman

2019 FMMA Annual Conference Burn Your Ships - Going All In!

The Value of the Free Market to Self-funded Employers Transparency (Part 3): The Economic Impact of Outcomes Dr. Richard Kube

Direct Primary Care and Self-insured Employers

Lifestyle-friendly Care for the 21st Century • Dr. Robert Nelson

Free Market Pioneers

Kim Jones • Free Market Health Care Broker

COVER - Predictability v. Volatility Milliman United States

Prescription Drug Prices

Bridge a Divided Electorate in Election Season • Brady Bizarro, Esq.

Plan Hacks • ShopHealth Marketplace DPC: Congress and HSA

The Simple DPC HSA Fix Isn’t So Simple • Dr. Lee Gross

Free Market Myth v. Fact FMMA Local Chapter Update

Join the Revolution • Illinois Chapter Conference Local Chapter Directory Why Be Involved Online at www.USHealthMedia.com

USHealthMedia.com | Vol. I | Issue 3

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SOLUTIONS FREE MARKET

HEALTHCARE

free market

MINUTE

BETTER BENEFITS LOWER COSTS

THE GOAL OF THIS PUBLICATION AND THE FREE MARKET MEDICAL ASSOCIATION IS TO EXPOSE THE CORRUPTION, EDUCATE YOU ON WHAT YOU CAN DO TO PROTECT YOUR PLAN, AND INTRODUCE YOU TO THE GOOD GUYS IN HEALTHCARE.

PUBLISHER Cathy Payne cpayne@ushealthmedia.com EDITORIAL MANAGER Megan Freedman megan@FMMA.org GRAPHICS / PRODUCTION / WRITING Ann Marie Ludlow aludlow@ushealthmedia.com SENIOR MARKETING DIRECTOR Ben Daniel wbendaniel@ushealthmedia.com ADMINISTRATION / ACCOUNTS RECEIVABLE Debbie Tolliver dtolliver@ushealthmedia.com CIRCULATION Tom Higgs circulation@ushealthmedia.com CONTRIBUTING WRITERS Dr. Richard A. Kube II, Dan Freeman, Dr. Robert Nelson, Brady Bizarro, Esq., Dr. Lee Gross Free Market Healthcare Solutions welcomes FMMA members to submit articles, information, opinions, or ideas that enhance the mission of this publication. Please submit contributions to info@USHealthMedia.com or megan@FMMA.org. For information about becoming a member of the Free Market Medical Association, visit: FMMA.org. FREE MARKET HEALTHCARE SOLUTIONS © 2018 Published bi-monthly by Fidelis Publishing Group, LLC P.O. Box 217 • Jarrell, TX 76537 No part of this publication may be reproduced, translated, stored in a database or retrieval system or transmitted in any form by electronic, mechanical, photocopying, recording or other means, except as expressly permitted by the publisher. For permission contact Publisher@USHealthMedia.com. POSTMASTER: Send address changes to: Free Market Healthcare Solutions Subscriptions. P.O. Box 217, Jarrell, TX 76537

BY MEGAN FREEDMAN

T

These storytellers fail to see (or hide) the true driver of these sad ransparency is the new tales is overall aggregate cost of favorite buzzword. Genuine care. When the costs and quality transparency and the application are known, and can be compared, of honest, free market principles in spending on healthcare, insurance healthcare solves not only the cost coverage, and out-of-pocket expensproblem, but also inefficiencies, de- es will drop significantly. This will not livery, access, quality, and more. be achieved in D.C. by legislation. President Trump recently signed How will it be achieved? The retwo pieces of legislation touted to fusal of the Buyer to play the game. bring more transparency to drug It is a fact of human nature that pricing. These pieces of legislation we want to be treated fairly; being ban gag clauses preventing pharfooled and/or exploited makes us macists from informing a consumer very angry. Despite the corporate if the cost of their medication is healthcare executives and their D.C. less expensive when they pay cash enablers frequently misjudging (purinstead of using their health plan. posefully?) Americans’ intelligence The positives of this bill mean that when it comes to their healthcare, some patients may spend a bit less patients are very adept at determinfor their medications and their phar- ing value when given the tools and macists won’t be hamstrung in their opportunity to do so. As Joe Biden efforts to help a patient save money. famously replied in Forbes to Epic But the legislation doesn’t address Systems CEO Judy Faulkner’s conthe actual overall cost of prescripdescending comment about health tion drugs. records, “If I need to, I’ll find someThe real discussion of total cost one to explain them to me and, by seems to be an abhorrent topic in the way, I will understand a lot more many circles. The preference is to than you think I do.” focus on the spending of an individAs a self-funded employer, you ual for care or for their premiums. don’t want to play anyone’s game; Those stories are easier to sell in a your simple goal is to have happy, sound bite. healthy employees in the most

Articles and written content are the property of Fidelis Publishing Group, LLC, or are used with permission of the contributing authors as noted in the publication. Photos and graphics not otherwise credited are property of Fidelis Publishing Group, LLC. The information in this publication cannot and does not constitute medical or legal advice. Information herein is provided for general information and educational purposes only and is not a substitute for physician or attorney advice. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of Fidelis Publishing Group, LLC.

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Megan Freedman has worked with self-funded benefit plans since 2005. For the past 12

years, she has worked with The Kempton Group serving as the Vice President of Corporate Communications. Ms. Freedman has extensive experience not only in employee benefits, but also marketing, sales, account management, executive support, and member services. Ms. Freedman is the Executive Director of the Free Market Medical Association. She was recently featured on Kevin Price’s Pricing in Business Radio show and writes and co-authors many articles, white papers, and educational materials. She is licensed in Life, Health, and AD&D in Oklahoma and Texas.

USHealthMedia.com | Vol. I | Issue 3


TRANSPARENCY

MEGAN FREEDMAN

DON’T MISS THE 2019 FMMA ANNUAL CONFERENCE! 5 Our 5th Annual Conference Keynote Speaker will be Dr. Ron Paul! The conference will also feature many self-funded employers who have walked your same path and want to share their experiences with you.

75 UPD GO FREE MARKET MINUTE

cost-efficient way. Understandably, walking off the field may look insurmountable, but many self-funded employers have done it! The FMMA’s mission is not only to connect the Buyers (you) with the Sellers of healthcare, but also to show you how to make it work! In this issue you will find helpful information about how to start down the free market path, including a new series that dispels the myths and lies that self-funded employers are led to believe. (p. 29) Our newly enhanced ShopHealth Marketplace at FMMA.org is a tool to help you and your employees find healthcare Sellers who want to sell you quality care for an up-front fair cash price!

Visit FMMA.org today to experience our ShopHealth Marketplace and find self-funding articles, case studies, and videos.

TM

Designed for your unique needs 5


2019 FMMA ANNUAL CONFERENCE

6 BURN THE SHIPS

Burn Your Ships: The Free Market Healthcare New World

FMMA ANNUAL CONFERENCE

THE 5TH FREE MARKET MEDICAL ASSOCIATION ANNUAL CONFERENCE IS RIGHT AROUND THE CORNER! YOU WON’T WANT TO MISS THIS AMAZING EVENT ON APRIL 11-13, 2019 AT THE HYATT REGENCY IN DALLAS, TX.

this broken system to reject the fear of letting go of their broken, listing, and sinking ship. The goal of the 2019 conference is to motivate, energize, influence, and empower the current and potential leaders of the free market movement to Burn Your Ships! With a spectacular speaker lineup of innovators and idea generators, this is a must-attend event.

The theme for the 2019 conference is “Burn Your Ships!” The Free Market Healthcare New World. As the leaders of this free market movement in healthcare, we must encourage our clients, patients, and the members of our team to reject the Stockholm Syndrome of our current healthcare system. Our mission has changed from just educating and connecting the buyers and sellers to one of revolutionizing the healthcare industry; helping those who are victims of

The Keynote speaker on Friday, April 12 is the honorable Dr. Ron Paul. Not only is Dr. Paul a former Congressman, physician, and author, he is also a staunch advocate for the free market and FMMA supporter. Other notable speakers include economist and co-author of Primal Prescription, Bob Murphy; Dr. Marty Makary, author of The Price We Pay; and David Contorno, the paradigm-busting benefits innovator and Founder of E Powered Benefit. Everyone will find something of value in one of our eight breakout sessions covering topics like Incorporating the Free Market into your Benefit Plan, HMOs & the Free Market, Pricing of Specialty Care, Lies Employer’s Believe, Creating Bundled Pricing, and more! The conference will close with our Founder Panel where Dr. Keith Smith and Jay Kempton will present Burn Your Ships: Going All In! Registration will be opening soon! Sponsorship opportunities are available. Visit FMMA.org to learn more! 6

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Conference Details Hyatt Regency Dallas 300 Reunion Blvd. E Dallas, TX 75207 April 11-13, 2019 www.fmma.org

The FMMA cannot change the broken healthcare system alone. Your support and assistance is needed to create a better system in which you can create or maintain your own successful plan and offer your employees valuable healthcare choices. Exhibitors: Sponsor and Exhibitors must be FMMA members. Space available on a first come, first served basis. 15 Premium 8x10 booths at entrance • 25 Standard, 6-ft table in adjoining room For questions about the FMMA or the Annual Conference, visit www.fmma.org or email support@fmma.org. Check out upcoming events in your area at www.fmma.org/events and www.fmma.org/local-chapters

7 2 01 9 F M M A A N N U A L C O N F E R E N C E

Where: When: Register:


the

VALUE OF THE FREE MARKET

8 T H E V A L U E O F T H E F R E E M A R K E T TO S E L F - F U N D E D E M P LOY E R S

to Self-funded

EMPLOYERS

T

◦◦ Transparency in healthcare is crucial to fulfilling the fiduciary responsibility of being self-funded and using health plan dollars to only pay for reasonable costs.

he free market movement in healthcare is vital to fixing the problems with our country’s current care delivery system. The Free Market Medical ◦◦ Complying with the fiduciary responsibilities outAssociation was founded based on three pillars: Price, lined in ERISA is becoming a hot topic for the DOL. Value, and Equality. These pillars are essential to the Plan Administrators must pay special attention to long-term success of self-funded health plans.  how Plan assets are being spent. Healthcare transparency provides you and your • The FMMA connects you with free market physicians employees with the information and the incentive to and facilities who have embraced bundled, cash choose health care providers based on value. Value is based pricing and understand that your Plan’s sucnot just about price; but rather price and quality. cess is an essential part of keeping the local commuYour employees are inundated with media, advertisnity strong. ing, and hype that incorrectly informs them that valuable healthcare has to be expensive; the highest quality will • The FMMA helps you find brokers/consultants and cost more. However, the quality of healthcare is not other vendor services who believe transparency is related to the price in the way consumers are taught to important to your Plan and understand that transshop for other goods and services. parency is important in their business as well. Better quality care is almost always a lower price.  • Finding the right facilitators or vendors can greatly High quality and low complication rates combined with impact your plan. The FMMA educates employers on efficiency enables these providers to charge far less than how to find vendors that can have a good impact. a low value choice. ◦◦ For example, what value do your current vendors provide? In what way, and how much, do they get Why is the Free Market important to you? paid? Have they embraced the free market and For a self-funded employer, being part of the free maradvise you to use plan assets in the most prudent ket movement is very important to the long term success way? Do they understand that network/PPO disof your Plan. counts have no real world value? These questions are important and circle back to being a responsi• Competition in health care delivery is the key to ble fiduciary of your Plan. sustaining affordable, quality benefits for your employees.

• As a Plan Fiduciary under ERISA, it is important for you to be part of the free market movement. 8

USHealthMedia.com | Vol. I | Issue 3


Direct Radiology Services for the Free Market. Transparent Costs + Centralized Scheduling and Records + Expert Care

The Right Price Our efficient scheduling advocates work with our radiologists to ensure exam quality. No added bureaucratic costs, outsourcing surcharges, or expensive middle men inflate our fair flat price.

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Same high quality medical imaging. At a fraction of the price.

greenimaging.net To discuss partnership directly with principal, Cristin Dickerson, MD: Call 713-775-7252 or email drdickerson@greenimaging.net.


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USHealthMedia.com | Vol. I | Issue 3


PA R T 3

APPLYING FREE MARKET VALUES TO SPINE AND ORTHOPAEDICS

TRANSPARENCY:

The Economic Impact of Outcomes

11

â–

T H E E C O N O M I C I M PA C T O F O U TC O M E S â–

n our last commentary, we discussed price transparency and how its implementation is the heart of driving free market principles in healthcare delivery. There is an equally important need to establish transparency of treatment outcomes. This is much more challenging because it is easier for the lay person to understand price more so than medical terminology and outcomes benchmarking. A few benchmarks to investigate are infection rates, re-operation rates, and transfer rates. These are significant complications, adverse events and cost drivers that usually fall outside the scope of any quoted or contracted prices, even if using bundled models. CMS.gov can have data published for various facilities as it relates to these types of issues. However, not all facilities are Medicare affiliated and there will not be reporting for those measures. Fortunately, thanks to the free market movement, groups like Healthcare Bluebook are collecting data. It is now possible, in many markets, to go online to review how a particular provider rates on price and quality. Also, administrative companies like Exclusive Surgeries Solutions use databases to benchmark providers on quality nationally. Groups and tools such as these can be useful when trying to vet a

provider that is independent from the CMS system. This can help you shop for outcomes in addition to price, which ultimately is how one determines value. Do not be afraid of the small and medium sized independent providers. If they are alive and well, it is only because they are competing successfully against larger hos-

PA R T 3

I

DR. RICHARD KUBE

by dr. richard kube

pital systems that control large sections of the healthcare market. The reason those smaller or independent groups still exist is because there is enough word of mouth for patients to pro-actively seek them outside of the frequently controlled referral patterns of hospital employed physicians. These independent providers are typically independent thinkers, constantly looking at ways to improve what they provide to

Richard A. Kube II, MD, FACSS, FAAOS, CIME is a fellowship trained spine surgeon and Founder/Owner of Prairie Spine & Pain Institute, in Peoria, Illinois. He also founded and owns Prairie Surgicare, an AAAHC certified surgical facility. He holds Board Certifications from the American Board of Spine Surgery, American Board of Orthopaedic Surgery and American Board of Independent Medical Examiners. His practice is dedicated to providing comprehensive operative and non-operative treatment for spinal ailments with a special interest in minimally invasive surgical techniques. Dr. Kube is also engaged in active research and education projects. His interests extend into strategic planning and entrepreneurship as he is Advisor to Twisted Sun Innovations, a Hydrogen energy company currently working on renewable energy solutions for the U.S. Department of Defense. Dr. Kube currently serves as clinical faculty at University of Illinois College of Medicine at Peoria.

USHealthMedia.com | Vol. I | Issue 3

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their customers/patients. Not only do they assess ways to diminish complications, they also tend to track metrics for surgical success.

Regardless of provider size or independence, anyone of quality who provides medical care should be readily able to speak to their data on outcomes and complications. They should also be able to discuss the long-term outcomes for treatment as this is important when determining the fully burdened cost of care, which is known in the medical industry as cost per quality adjusted life year (QALY). Without getting too far into the weeds, as an employer you need to be aware that a self-insured/self-funded group and a fully insured group will view full burdened cost differently. The average fully insured group changes insurance plans every two years. Hence, the insurer is often trying to “buy time” so that the next insurer (on average one year from now) will have to pick up most of the expense for a medical condition. Often “band-aid” types of procedures are favored, and therefore are authorized more frequently

T H E E C O N O M I C I M PA C T O F O U TC O M E S

DR. RICHARD KUBE

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jections can make a lot of sense when paired with physical therapy for a disc herniation. Many folks heal and that is all the treatment needed. However, multiple injections done repeatedly are generally ineffective from BOTH treatment AND cost considerations in the long term because surgery is inevitable for the patient not responding early to conservative measures. Delaying the inevitable costs more in terms of buying more ineffective care, more time without your valuable employee in your workforce, and an overall less satisfied employee. All aspects must be considered when calculating the most favorable fully burdened cost for success. Hopefully, these concepts provide a good starting point for ways to research information on outcomes and their importance beyond the obvious desire for patient satisfaction. Like all goods and services, there are many aspects to consider when determining the best value options for medical care. In our next article we will discuss smaller independent providers in greater detail, covering

PA R T 3

Like all goods and services, there are many aspects to consider when determining the best value options for medical care. due to lower cost in the short term. However, if you are employing and insuring an individual for several years in a self-funded plan, this methodology does not make sense because your metrics are based upon a much greater time duration. As a self-funded plan, you will pay more for the same results if you use the same thinking as fully insured plans. For example, one or two epidural in-

why they are typically more open to free market solutions which can customize to your individual business needs thereby often providing the greatest value.

COMPETITION AMONG BUSINESSES KEEPS PRICES LOW. INFLATION IS MOSTLY A PROBLEM IN THE INDUSTRIES WITH THE MOST GOVERNMENT INVOLVEMENT WHILE INDUSTRIES WITH HAVE MORE FREE MARKET COMPETITION SHOW BUSINESSES ARE RELUCTANT TO RAISE PRICES—ALWAYS LOOKING FOR COST EFFICIENCIES TO GAIN AN ADVANTAGE. JUST THINK ABOUT PRICES FOR COMPUTERS, FOOD, AND CLOTHES TO REALIZE THE GAINS CONSUMERS CAPTURE FROM ROBUST COMPETITION IN A FREE MARKET. 12

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PA RT 3

A

MARRIAGE

MADE

IN

H E A LT H C A R E

HEAVEN

DPC AND SELF-INSURED EMPLOYERS:

L I F E S T Y L E - F R I E N D LY C A R E F O R T H E 2 1 S T C E N T U R Y by d r . r o b e r t n e l s o n

DR. ROBERT NELSON

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W

L I F E S T Y L E - F R I E N D LY C A R E F O R T H E 21 S T C E N T U R Y

hat do patients really want? Most surveys, formal and informal, indicate patients want two things, consistently, above others: one, to feel like they’ve been heard; and, two, to have access to doctors when they need them.

Photo by NEC Corporation of America

communication and dissatisfied patients; and are often traced back to the moral hazard and poor value proposition fostered by our healthcare payment methods.^ There is certainly no paucity of clinical care insults added to economic injury resulting from our dependence on a bizarrely inefficient, expensive, and complex insurance payment system. Our dysfunctional third-party payment system often leads to dysfunctional clinical practices and habits for those physicians and patients who are still at the mercy of the complexities and barriers created by the third-party network billing apparatus. 

Dr. Robert Nelson received his M.D. degree at the Ohio State University College of Medicine. He is the Founder and Owner of Encompass Health Direct, in Cumming, Georgia; the publisher and editor of The Sovereign Patient blog; and a founding member and spokesperson for the Georgia chapter of the Free Market Medical Association. Dr. Nelson has spoken about healthcare economics and free market healthcare throughout the country, and has been a guest expert on multiple radio programs.

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PA R T 3

Being “heard” means a desire for meaningful and timely communication, not edicts. We want to feel involved with our care. “Access” means an appointment sooner than a week from Wednesday.   When we drill deeper into the question of access, patients unanimously express a desire to use asynchronous communication platforms like secure texting, in-mail messaging, or email to communicate directly to their doctor. Without question, most of us are comfortable with the technology we use in our daily life to communicate with friends, family, vendors, and business associates. We prefer to leverage those tools to make medical care more efficient and convenient. We want lifestyle-friendly care that matches our 21st century lifestyle! But within our insurance-driven healthcare landscape, barriers to lifestyle friendly communication can impede access and impair timely exchange of information between doctors and patients. These clinical shortcomings abound, stemming from our Fee-for-Coding^ mentality.  Patient service-related inadequacies take the form of fragmented care, over-utilization of specialists, poor

^ Visit USHealthMedia.com for links to sources, references, and additional information on these topics.


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L I F E S T Y L E - F R I E N D LY C A R E F O R T H E 21 S T C E N T U R Y

DR. ROBERT NELSON

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The current Fee-for-Coding insurance-based system creates an unspoken priority focused on coding & billing as many revenue-generating encounters as possible. This focus redirects valuable time and resources away from patient care, with a focus towards documenting “billable” work in the chart. Many office visits are so rushed that there is barely enough time to decipher concerns or new symptoms, resulting in a tendency to refer even the simplest problem to specialists just to keep on schedule. Doctors rarely have time to return phone calls; they’re too busy running from room to room, documenting enough data to “drop the charges”^ to cover the excessive overhead forced on them by unnecessary administrative^ costs tied to our payment system. The whole insurance network system contributes to patient-unfriendly habits and practices that crop-up within medical care establishments.  These shortcomings are so pervasive that a case can be made that doctors don’t work for the patient’s best interest anymore… but instead play the role of contracted providers^ for the insurance network. A consequence of this “gatekeeper” role, and the mentality it fosters, is that the front-desk and medical assistants in many primary care offices have become very skilled at saying “no” to a litany of patient requests: • “We can’t work you in, you will have to go to the Urgent Care.” • “We can’t call that in for you, you will have to be seen even if you are feeling fine.” • “You have to have a physical on the first visit before any medications prescribed.”  • “No, we can’t email it to you, it’s a HIPAA violation.”  Thankfully, alternative payment models like Direct Primary Care (DPC) are not dependent on billing encounters in the office to drive revenue. This liberates the physician and staff to provide the right care at the right time via the right modality; whether that be in-person, over secure texting app, phone, or even a house call. With DPC and similar practice models, the artificial constraints and moral hazards of Fee-for-Coding disappear, replaced by the satisfaction of helping patients solve problems as life happens and within a non-rushed, lifestyle-friendly atmosphere.

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We can refer to this as “everywhere care”.^ And it becomes a reality when the doctor is paid to be available and accessible and give their undivided attention to the problem or issue, as opposed to having to “document elements” in the chart to get paid.  “Everywhere care” allows the doctor to be flexible, creative, and innovative in deciding how to deliver the best care for each patient including liberal use of online tools, mobile communication apps, and flexible scheduling.  “Everywhere Care” can offer seamless two-way communication modalities on secure trusted platforms via smart phones, laptops and tablets devices.  A plethora of feedback from DPC patients around the country indicate that they love the easy connectivity and appreciate the accessibility.   In Part 1^ of this series, we made the case for Direct Primary Care as a free-market-friendly alternative to traditional insurance-based primary care. In Part 2^, we constructed a new model using Direct Primary Care as the clinical hub of the Self-funded health Plan. Many Self-insured companies are beginning to discover the value and savings in this approach. By contracting with a Direct Primary Care practices and re-routing subsequent encounters away from the more expensive insurance-based protocols, Self-insured employers can utilize creative plan designs to cut costs and improve employee satisfaction.  So, not only is DPC a more cost-effective and affordable way to render highly effective primary care, but revenues result from ongoing satisfaction, and superior outcomes, which drives loyalty and patient retention. Case^ in point, “Colorado-based DigitalGlobe^, a self-insured provider of high-resolution Earth imagery products and services, partnered with Nextera Healthcare^, Colorado’s first direct primary care (DPC) provider, to evaluate the effectiveness of DPC membership for employees and their dependents. The seven-month case study revealed improved health outcomes, enhanced patient satisfaction, and reduced healthcare costs, including a 25.4 percent reduction in claims costs and a 4.7 percent reduction in risk scores for members who participated.” “Next-day appointments and 24-hour access to providers via phone, email, and text messaging furthered the DPC commitment to providing convenient, personalized care and attention. Eighty-nine percent of employees reported via a post-study survey that they received

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What do you get when you mix low overhead with high technology and wrap it around an excellent physician-patient relationship?

flexible, timely appointments and follow-up visits.” In a typical insurance-based practice, meaningful face-to-face time between doctor and patient is somewhere between 5-10 minutes. Interesting, but surprisingly, shorter visits tended to result in more prescriptions being written and less time trying to get to the root of clinical problems. And prescribing is usually a poor surrogate for good counsel and reassurance.

The quote above is NOT from a Direct pay doctor or advocate, even though it precisely describes the attributes of DPC. The quote is from the American Association of Family Physicians: The Ideal Medical Practice Model: Improving Efficiency, Quality and the Doctor-Patient Relationship.^  Notice how many of the characteristics of the Ideal Medical Practice looks very similar to the characteristics of a typical Direct Primary Care practice.  The ability to provide exem-

plary service is a natural element that arises from Direct Primary Care and other direct-pay models. This direct engagement, absent the complexities and barriers created by the third-party network billing apparatus, enables a level of lifestyle-friendly involvement that naturally leads to a more satisfactory patient-doctor relationship and potentially superior clinical outcomes. It’s hard to argue with cheaper and better.

15 DR. ROBERT NELSON

You get an ideal medical practice—a model designed to enhance doctor-patient relationships, increase face-to-face time between doctors and patients, reduce physician workloads, instill patients with a sense of responsibility for their health, and cut wasted dollars from the entire system.


Shop Online for Healthcare with ShopHealth!  Save an average of 50-70% on your care by using the FMMA ShopHealth online marketplace!  Know before you go with bundled, transparent, and up-front pricing.

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SHOP TODAY! WWW.FMMA.ORG

 Search and compare procedures, services, locations, physicians, surgeons, imaging providers, or facilities. USHealthMedia.com | Vol. I | Issue 3


I

all-inclusive and that same surgery costs about $3,200. As well, free market services are rendered by providers who typically have better outcomes than larger facilities. A self-funded employer can offer the employee a choice; if the employee chooses the cash pricing, they may reduce that deductible to $2,000 or waive it completely because free market is saving the company money too. Some employers even pay the travel expenses to and from the surgery center. When self-funded, CEOs are free to incentivize employees in this

n short, Kim Jones is incorporating FMMA into group health plans and saving employers thousands. But, that’s not entirely what sets her apart. Many people recognize brokers have a nice gig; guide and provide clients with the most appropriate health insurance policy. They are authorized by specific insurance companies to act on their behalf to help employers select a policy for themselves and their employees. Brokers earn revenue through commissions from the insurance companies.

You’re not buying health insurance, you’re buying health care. If that’s not how you’re thinking, then change the way you think.

Where Jones departs from the pack is her incorporation of the Free Market Medical Association and free market principals into group health plans. She believes the new paradigm helps employees get better care and employers save money. Jones says, “We market to our clients based on the type of plan they want, their group size, and the plans available in the area. We can offer small group or fully-insured like United Healthcare and BC/BS. Employers pay a premium and get a product that has a network attached to it.” Her expertise comes into play when employers are able to self-fund. Brokers are able to “get creative” and add free market providers to the mix. She explains, “Self-funded employers own their plan; they are the sponUSHealthMedia.com | Vol. I | Issue 3

sor. They pay a third-party administrator who keeps up with eligibility and claims. But, this is where we can be flexible. I gravitate to this kind of arrangement because integrating cash pricing and FMMA principles into health plans will save employers and employees a lot of money.” A simple illustration of her new paradigm: An employee at Widget, Inc. needs a hernia repair. Using traditional health plans, the full cost at an in-network hospital, with network discounts, will be about $15,000; the employee will pay about $5,000 outof-pocket for the deductible. Because Widget, Inc.’s broker is Kim Jones, when the employee calls to discuss options, Jones is able to suggest alternatives; one of which is a free market surgery center. These centers publish a cash price that is

way to choose the free market center for its price transparency and the cost savings across the board. “The incentive for employees is simple. Cash pricing is about an 80 percent reduction in cost; if the employee goes with the premier provider, that saves the company money and they can afford to waive everything.” She recommends this type of plan for any size company, although it may not be a good fit for everyone. “We have to look at the employee pool. It is not best for a group that may have high attrition or a percentage of employees with more serious needs; e.g., cancer, or heart disease.” Jones says she does her best to get the right third-party administrator into the mix as well. With self-funding 17

17 KIM JONES

PIONEERS

Kim Jones | Waco, Texas FMMA & DPC BROKER

M A R K E T

FREE MARKET PIONEERS

F R E E


F R E E

FREE MARKET PIONEERS

KIM JONES

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M A R K E T

and free market, when employers call in for a pre-authorization, the TPA may redirect and find out if the employee would be interested in the big hospital with the big deductible or the free market system and have the bill paid for them. “This gives people the choice and it’s a good thing,” she says. “Employees become consumers in their own health care.”

PIONEERS

that my clients know from where and how much I am being paid for the services I provide.” Jones stays involved with employee groups and shares information via employee meetings and payroll slips. “We are not making recommendations on their care, just giving them all the options regarding where and how they can receive it in order to keep their costs down.”

If you are planning a surgery, call me first and we’ll talk about it. Maybe you have a $5,000 deductible. But, you can get it all done at a free market center for $3,600. You won’t use your insurance, you won’t have to pay $5,000 out-of-pocket and a 20 percent co-pay. And, you won’t be billed by everyone from anesthesia to pathology six months after the fact. It’s once and done.

Broker Transparency Jones says it’s not just about the health care; her mission is also to create transparency in her own business. “A lot of brokers don’t understand that they are supposed to disclose what they are being paid. As a free market advocate, working to promote and encourage price transparency, I, too, want to be sure

She also shares her expertise with other brokers and says her only concern is that things won’t change and we will end up with a single-payer system. “When I give talks to broker groups and employers, I can see them leaning in. I always encourage them to get in touch with a local FMMA chapter, have a buy-in and listen to free market providers to understand why they are different. Many employers are incorporating

these providers into their plans and waiving ALL out-of-pocket costs for employees. “Costs are out of control and this information is too good to keep to ourselves. Once that is done, I work on the realization that brokers need to help customers rather than make more money. We have to care about people more than profit.” Jones says she is a firm believer that things need to change. “Employers needs to start shopping differently for their programs and putting buyers in touch with sellers of healthcare. This cuts out the high-dollar, pulled-out-of-the-air PPO pricing. It’s too complicated for the average person to wade through so most people just accept it.” She says it is a challenge to make everyone fit into the mold but believes large companies have no reason not to participate. “They have a fiduciary responsibility to make sure the prices they are paying are accurate and fair, especially if costs are being passed on to the employee.” Jones’ bottom line is Just. Make. The. Call. “Most people will be surprised. So many of us get our insurance from our employers and, as the broker, or middle man, I am committed to getting it right for the consumers. I’m on their side.”

Kim Jones is the Director of Employee Benefits for J & H Insurance Services, Inc. in Waco, Texas. Kim has over 25 years of experience in employee benefits design, management and insurance as well as extensive human resource experience. She oversees the department, including account management, customer services, administration, market analysis and sales. Kim’s focus is on self-funding and alternate funding, utilizing price transparency for healthcare costs for both large and small employer groups. Using her extensive knowledge of the industry, Kim incorporates compliance, services, and plan design, to provide the best possible outcome for clients. She is a licensed Life, Accident, Health and HMO Agent.

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USHealthMedia.com | Vol. I | Issue 3


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MILLIMAN

UNITED STATES

PREDICTABILITY V. VOLATILITY:

IT DOESN’T HAVE TO BE AN EITHER/OR PROPOSITION FOR EMPLOYERS

MILLIMAN

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BY DAN FREEMAN

Introduction As healthcare costs continue their uphill march, many employers who are fully insured are feeling the squeeze between offering attractive, affordable health insurance and preventing their health plan costs from eroding operating margins. Further, the possibility of a catastrophic claim has long dissuaded these employers from using a standalone self-insured plan to manage their healthcare costs. For many, the thought of one large medical claim dealing a crashing blow to a plan budget makes self-insurance seem less attractive than the reality of steady increases in fully insured health insurance premiums. However, when taking a long-term view of a self-insured strategy, as well as an active risk management approach to self-insured costs, the pain of fully insured premium costs outweighs the additional risk stemming from self-funding.

Fully Insured coverage To understand the savings borne by a self-insured strategy, one must first gain an understanding of fully insured premium development for group health coverage. Fully-insured carriers will typically reflect all expected costs associated with providing healthcare benefits to employees and their dependents. These costs are comprised of three main components: benefits or claims paid to covered lives, internal expenses or costs to run the plan, and external, mandated expenses that need to be passed through to the customer. The carriers will update their cost estimates for the upcoming plan year in the form of an annual premium renewal report. It is important to note these premiums are developed to cover costs after any employee out-of-pocket costs. In addition, the claims costs are typically based on a traditional, fee-for-service reimbursement premise. Before we compare fully insured costs and trends to self-insurance, we first must define self-insured coverage.

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Self-Insured Programs defined Cost, capacity, control: The three pillars of self-insurance. For years, these goals have eluded employers in their search for lower health care costs. The leap from a fully insured plan to a self-insured arrangement was much too great a stretch, but as fully insured premiums are consistently outpacing other employer expenses, many see self-funded arrangements as a reasonable strategy to temper this rising expense, while still providing high value, affordable health benefits. Cost: A self-funded program can be thought of as having three main layers: the primary employer layer where the employer is responsible for payment of its claims and benefits up to a certain retention point (more on that later). The second layer is the fixed expense layer, which is required to administer the health plan. The third layer, or stop-loss layer, is where a stop loss carrier pays claims that have exceeded a certain annual claims limit, $75,000 for example. In the next section, we will demonstrate how these layers of cost can remain consistently below fully insured premiums. Capacity. Many have felt they need to be extremely large employers, with as many as 1,000 enrolled employees, to reap the benefits of a self-insured strategy. USHealthMedia.com | Vol. I | Issue 3


Making the case When making the decision to self-insure, a feasibility study is crucial to the process. This study will list and analyze the advantages and disadvantages for both funding arrangements. The study should also lay out a high-level strategy for the employer group, regardless of their decision of whether to go self-funded or fully insured. USHealthMedia.com | Vol. I | Issue 3

A good feasibility analysis should also show the three main layers of self-funded costs, and then compare to what the fully insured equivalent would be for the same health plan coverage. This will give the decision-makers enough knowledge and comfort to take the appropriate course of action to meet their specific needs. A summary of a typical feasibility study is shown in Figure 1. This is based on a hypothetical 350 employee life company. The figures shown below are represented on a Per Employee per Member (PEPM) basis: As is evident in Figure 1, self-insurance saves employers on many different levels. For one, state premium taxes are charged in a fully insured plan, but not under a self-insured plan. Further, an employer group can avoid the (potential) new taxes that fully insured plans pass along to employers under the Patient Protection and Affordable Care Act (ACA). These taxes typically amount to approximately 5% of premium in a fully insured plan, costs that are avoided under a self—funded arrangement. Self-insured groups can also avoid frictional costs such as a broker commission and the profit or risk load that an insurer builds into its premium charge. These charges are typically calculated as a percent of premium, rather than a flat PEPM. This tends to create a disincentive to effectively manage premium levels, since higher premiums equate to higher profit loads and higher commissions. Additionally, a self-insured group that actively manages claims can see a discount to their stop-loss premiums, relative to a self-insured group that would rely on a traditional carrier to manage and adjudicate their claims. A program such as FMMA could lead to not only lower stoploss reimbursements, but also lower incidence of claims that actually would breach their stop-loss deductible. 21

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Figure 1

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While the law of large numbers does play a part in a self-insured structure, it is not a strict requirement to enter this space. With the right amount of stop loss protection, and active management of costs, a relatively smaller employer, as low as 50-75 lives, can outperform fully insured costs over the long term with a reasonable level of predictability. For example, a mid-size employer considering moving to stand-alone self-insured arrangement could seek to retain a typical stop loss level of $75,000 per claimant. This means that the group is self-insured up to $75,000 per year per plan enrollee. The stop loss carrier would absorb any paid claims above this level. Being able to cap losses at lower attachment points is crucial for smaller employers to operate under a self-funded arrangement. It is important to note that there are other self-insured arrangements available for employers who may not have the risk tolerance to be a stand-alone self-insured entity. Options such as health captives and self-insured MEWAs are also a viable option. However, for purposes of this article, we will focus on self-insurance for stand-alone employer group. Control. Similarly, self-insured plans offer their members more choice in plan designs and networks compared with the offerings of a traditional insurer. Benefit plans can be tailored to the needs of an employee population. In addition, because self-insured plans are governed under ERISA, these health plans are typically exempt from state laws, which often mandate certain benefits. Further, a self-insured group can opt to enter into networks or cost containment programs that actively manage and control provider reimbursement levels that they cannot access with a fully insured carrier. An effective program, such as collaborating with providers that belong to the Free Market Medical Association (FMMA), can reduce the level and volatility of claims on a consistent basis.


MILLIMAN

P R E D I C TA B I L I T Y V. V O L AT I L I T Y

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Figure 2

While the main advantage of fully insured coverage is predictability, the main disadvantage is cost, and not just for the upcoming plan year, but also each successive year of coverage. Not only are there more cost components in fully insured coverage versus self-insured, the annual trend increase in these costs are typically higher than self-insured. This is why longer-term projection is necessary in the feasibility study. It starts with an analysis of the employer’s fully insured plan – its premiums and historical and projected renewal trends – which are used to develop a baseline of future cash flows for the next five years. Using commonly accepted actuarial methods such as examining an employer’s actual trend experience, expected losses are projected for the employer at the three self-insured layers. Figure 2 shows an example of a five-year projection of self-insured costs versus fully insured costs. It is important to note that self-insured claims are assumed to increase at a lower trend level than fully insured rate increases, due to the active management of costs. Utilizing cost control measures, such as the FMMA, has been shown to reduce costs even further on an annually consistent basis. The three trend lines shown are based on typical premium increases for a fully insured group, a self-insured group in a traditional, discounted fee-forservice arrangement, and a self-insured group that has partnered with FMMA providers. Overall, as Figure 2 shows, self-insured costs will be significantly lower in the long run.

An appetite for risk? The volatility of self-insured costs needs to be measured and communicated to the employer before they can make any decisions around a risk management strategy. For many, it will depend on what they consider 22

an acceptable level of risk. While no one number can completely pinpoint that risk, a feasibility study lends objectivity and support to the decision making process by outlining both the short and long term expected outcomes. The feasibility study also develops a range of possible loss scenarios and an expected loss at different risk tolerance percentiles. There is always going to be some month-to-month variability around the expected loss percentile, but this figure gives an employer a point of reference for weighing its risk. The chart below show the probability of actual claims outcomes, with a stop-loss retention point of $75,000, for a 350-life group (Figure 3). This chart is the result of Monte Carlo simulations performed for a typical 350-life employer group, ran for 10,000 simulated plan years. While a larger employee pool reduces volatility and increases predictability, an additional risk load could still be budgeted by the employer. For example, in Figure 3, an employer could price at a level close to the 75th percentile, so a 5% load to premium would be sufficient. Also shown in the chart is where a typical fully-insured carrier would price their premiums; usually around the 75th to 85th percentile. Again, a self-insured employer could budget their costs at the same level as the fully insured charge, if so desired. When the losses are lower than expected, employers rather than the carrier receives the benefit, typically in the form of a fund surplus.

Final Analysis The decision to move to a self-funded structure requires more than a willingness to accept some degree of claims variability. It also requires a company-wide buy-in to the decision from all departments, especially from human resources and finance. A group will need to tranUSHealthMedia.com | Vol. I | Issue 3


Figure 3

But the employer also must…. • Accept claims variability • Be more involved in overseeing claims activity • Accept a greater administrative role

SUMMARY  Before the decision is made to move to a self-funded arrangement, the group will need to consider if the advantages outweigh the additional burdens.  Much of the success or failure of self-insurance depends on the employer and its confidence in its decision and its understanding of the risks involved. This confidence and understanding can be gained through a comprehensive feasibility study. DAN FREEMAN is a Consulting Actuary with the Employee Benefits Health and Welfare practice in Omaha, Nebraska. As a credentialed actuary, Dan is responsible for actuarial reports and analysis for medical, dental, life, disability, paid time off, and other ancillary plans. MILLIMAN is among the leading providers of actuarial and related products and services to insurance markets worldwide, with over 500 credentialed actuaries and countless models and tools. Milliman’s Health Cost GuidelinesTM is recognized as the gold standard for rating and pricing. Incorporating more than 50 years of research and consulting practice, Health Cost GuidelinesTM is compiled from published, unpublished, private, and public data sources. USHealthMedia.com | Vol. I | Issue 3

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sition from a “set-it-and-forget-it” mentality of a fully insured plan to a commitment to be actively engaged in a range of activities. Activities from monitoring claims activity to reviewing periodic claims reports to understanding the impact of incurred but not reported (IBNR) liabilities are essential. In addition, as other employees move in and out of the group plan, an employer, with some actuarial support, periodically needs to understand how its risk profile matches up against the budgeted costs every year. Assessing the issue requires a step up in risk management that would not be necessary under a fully insured plan. With self-insurance, an employer can… • Avoid state and federal premium taxes • Eliminate the cost of broker commissions and insurer’s profit load • Gain control over plan design • Have a wider choice of services and networks • Realize savings from potentially lower claims • Collaborate with their plan advisors on employee benefits/risk management issues surrounding their health plans

 Self-insurance is certainly not for the faint of heart, but for those that can weather the occasional wide swing in claims and not panic, self-funding can achieve lower health care costs over the long term and still offer comprehensive health benefits.

As an independent, third-party actuarial consulting firm, Milliman provides superior experience and expertise, and our work stands out for its thoroughness, relevance, and value. The products and services we offer are performed exceptionally well due to a flexible internal structure, which allows us to assemble collaborative project teams with specialized expertise. At the same time, clients can expect a local team to support their organization. Additionally, Milliman’s innovative application of technology adds value through creative use of data, analytical tools, and effective client communications. Through information, knowledge, and technology, we help clients meet and exceed their goals in the design and operation of benefit plans. Milliman consultants listen to the needs of clients and deliver advice and services tailored to their circumstances, both in content and scope. 23


PRESCRIPTION DRUG PRICES BRIDGE A DIVIDED ELECTORATE IN ELECTION SEASON

PRESCRIPTION DRUG PRICES

B R A DY B I Z A R R O , E S Q

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BY BRADY BIZARRO, ESQ.

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he midterm elections have worn thin the American public’s collective tolerance for political ads and negativity. A torrent of campaign commercials representing thousands of hours and billions of dollars revealed a deep political divide among Americans over major policy areas. Not surprisingly, healthcare topped the list in many polls as one of the top issues for likely voters this fall. What is surprising is, even in these trying times, one piece of the healthcare debate has forced a rare moment of bipartisanship in Washington and on Main Street: the debate over prescription drug prices. According to QuintilesIMS, spending on prescription drugs in the United States could reach $610 billion by 2021. Specialty drugs, or high-cost, high-complexity drugs, are expected to account for 50 percent of total drug spending by 2020 even though, according to Express Scripts, only 1-2 percent of Americans use them. Much of the burden of these high drug prices is borne by employers and their employees since most Americans (roughly 156 million) receive health insurance coverage through their employers. Willis Towers Watson reports prescription drugs overall account for nearly 25 percent of the total cost of employer-sponsored medical benefits. In short, high drug prices are a ubiquitous problem felt by Americans of every political stripe. In the last presidential election cycle, the Republican nominee, Donald 24

Trump, defied Republican orthodoxy by openly railing against drug manufacturers, claiming that they were “getting away with murder.” That characterization was echoed by the Democratic nominee as well as the Democratic Party’s progressive wing. Since the 2016 election, the Trump administration has followed through, taking major steps to increase price transparency and lower prescription drug prices. Generally, the administration’s supporters and detractors have applauded its actions. Early on, the administration released its “American Patients First” blueprint for executive action. It outlined certain policy proposals, including restricting the use of patient assistance programs, requiring drug manufacturers to disclose drug prices in television ads, and potentially forcing fiduciary status onto pharmacy benefit managers. Since then, the Trump administration proposed a new rule that would lower costs for Medicare Part B drugs by basing payment parameters on international drug prices and introducing competition. The Department of Health and Human Services (“HHS”) projects this plan would provide $17.2 billion in savings for Americans taxpayers and patients. Permitting Medicare, the single largest purchaser of drugs in the United States, to negotiate

with drug manufacturers is a significant development, but it will not provide much help to the millions of Americans with employer-sponsored healthcare. That is not to say that the Trump administration has not taken actions to help employers and their employees—it has, and more regulatory action is to come. Aside from browbeating a number of large pharmaceutical companies on Twitter into lowering prices or deferring price increases across the board, the president signed two bills on October 10th intended to keep drug prices low and to force transparency. In doing so, he noted that tackling prescription drug prices is a bipartisan issue that Republicans and Democrats care about and want to address. One of those bills bans so-called “gag” clauses in commercial health insurance, included in coverage offered by employers. These clauses had restricted pharmacists from disclosing drug pricing information with customers. In addition, the adminis-

USHealthMedia.com | Vol. I | Issue 3


B R A DY B I Z A R R O , E S Q ■

excluding the use of certain prescription drugs altogether. With respect to medical tourism, there are many challenges to overcome with providing this kind of international benefit. First, it is illegal to import foreign prescription drugs into the United States. Drugs manufactured for sale abroad, even those manufactured within the United States for sale abroad, are not approved by the Food and Drug Administration (FDA), even if they are chemically identical to the American versions. While the FDA maintains a policy of enforcement discretion, this practice is very precarious for employers to pursue. Just as international sourcing of drugs is potentially perilous, so too is the restriction or categorical exclusion of certain drugs. This practice can be permissible as long as the employer-sponsored plan includes a caveat about preventive drugs that otherwise need to be covered under the Affordable Care Act (ACA), if

PRESCRIPTION DRUG PRICES

tration followed up on its blueprint by proposing a rule that would require drug manufacturers to disclose drug prices in television ads. The rationale for these actions is that increased transparency should help employers and their employees identify alternative, cheaper options better, with respect to prescription drugs. Despite these executive and legislative actions, a number of employer-sponsored health plans are taking matters into their own hands. Many employers are re-negotiating their pharmacy contracts, hoping to obtain a better deal from drug companies. Others are increasing employee deductibles, co-insurance, and co-payments. Still others are resorting to implementing cost-containment programs, which can be risky for employers and employees. Two of the more popular cost-containment strategies involve the international sourcing of drugs, or medical tourism, and restricting or

applicable. Further, the restriction or exclusion must not be implemented as a means to discriminate against individuals with a particular disease or condition. This hurdle is harder to overcome than most plans expect. It is not easy to implement and administer these kinds of programs. It 25 involves complicated, tedious work. Yet, a growing number of employers are willing to take such risks to control drug spending which, in many cases, can imperil an entire health plan. Most Americans agree that prescription drug prices are out of control. We have reached a tipping point in the debate. As a result, both major political parties are largely on board with making major changes to how our healthcare system prices and delivers pharmaceuticals. No matter how the political landscape shapes up in the coming months, the government will continue to take actions to alleviate the burden of high drug prices. It is likely that those actions will first affect Medicare and Medicaid, as those programs are run by the government. Further action will be needed to provide relief for employer-sponsored plans that cover the majority of Americans. Until those actions are taken, employers will continue to pursue cost-containment programs, which are designed to combat the drug manufacturers. In the end, the bridge connecting red and blue should prove enough to force actual change.

Attorney Bizarro joined The Phia Group, LLC as a healthcare attorney in early 2016. As a member of The Phia Group’s legal team, he specializes in regulatory, transactional, and compliance matters related to healthcare and employee benefits law. He provides general consulting services to clients, including employers, third-party administrators, brokers, and vendors associated with employee health benefit plans, on matters related to the health insurance industry, including ERISA, ACA, and HIPAA compliance. He also performs contract review and due diligence on healthcare transactions and assists with dispute resolution efforts between the various players in the healthcare industry in an effort to protect plan members and plan sponsors. Attorney Bizarro earned his B.A. in Political Science from Boston University, graduating magna cum laude, and his J.D. from Boston University School of Law, concentrating in Health Law. While at BU Law, Brady served as a Note Editor for the International Law Journal, participated in the Edward C. Stone Moot Court Competition, and was a member of the Health Law Association. He previously worked as a summer associate at Greene LLP, a civil litigation firm in Boston that specializes in healthcare fraud cases and the Civil False Claims Act, and as a Rule 3:03 attorney with BU Law’s Civil Litigation Clinic, where he represented indigent defendants in employment and discrimination cases in state court.

USHealthMedia.com | Vol. I | Issue 3

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#PlanHacks 26

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The FMMA’s brand new ShopHealth Marketplace is a game-changer in the free market movement! This public-facing pricing and services search tool allows anyone to search for the best options for price and quality in their area. Users can search and compare physicians, surgeons, specialists, facilities, laboratory, imaging, and more using the name of the medical service, key words, provider name, provider type, and CPT codes. The first tab shows the applicable medical service, while the second tab shows the Sellers who provide that service. When a user clicks on a provider’s profile, they can view information about the practice or company, all of the services available from that provider, and their education and awards. Employers can also search for value-driven vendors to help them manage their self-funded health plan by choosing the Vendor search at the top of the page. Check it out today at FMMA.org!

FREE MARKET PROVIDERS COST UP TO 80% LESS THAN “NETWORK ALLOWABLES” WITH HIGHER QUALITY AND BETTER OUTCOMES. NETWORKS AND CARRIERS ARE INCENTIVIZED WHEN CLAIMS COSTS ARE HIGH DUE TO THEIR REVENUE STREAMS. REMOVING THESE VALUELESS THIRD PARTIES DRIVES DOWN COSTS.

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USHealthMedia.com | Vol. I | Issue 3


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THE SIMPLE DPC HSA FIX ISN’T SO SIMPLE

DR. LEE GROSS

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The Simple DPC HSA Fix Isn’t So Simple “There is irony that the national leaders in price transparency are the first ones met with federal price caps.” ~Dr. Lee Gross

R

ecently, Congress began working on a fix to the Direct Primary Care (DPC) HSA issue. This has created angst and division within the DPC community. To understand, first you must understand why there is an HSA issue at all. In the Affordable Care Act, Section 1301(a)3 allowed DPC medical homes to be sold in combination with qualified health plans as long as the two together satisfied ACA plan standards. Following, Health and Human Services (HHS) issued federal rule CMS-9989-F declaring that “direct primary care medical homes are not insurance”. How did DPC, then, come to be considered a health plan, despite HHS regulations clearly stating it isn’t? When employers wanted to integrate DPC with a high deductible health plan, IRS issued contradictory advice that DPC was a second health plan. In 2014, IRS Commissioner John Koskinen issued a clarification letter that has served as IRS policy on DPC ever since. In it, he declared his opinion that DPC was a second health plan. This not only disqualified one from using HSA dollars from paying for DPC, mere membership in a DPC practice disqualified one from even contributing to their HSA. Since that time, many have attempted to overturn this opinion through legislation or administrative action. The Primary Care Enhancement Act (PCEA) had been intro-

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duced in Congress on several occasions. The simple DPC HSA fix never saw a congressional hearing, despite growing bipartisan support. In 2018, the PCEA was finally scheduled in the Ways and Means Committee. Just 48 hours before the hearing, the widely supported PCEA was replaced with a strike-all amendment and substituted for a completely new bill (HR6199), which had never been seen or vetted. A quick analysis of this bill by DPC docs was startling. This “simple fix” was suddenly no longer simple, and it wasn’t really a fix at all. Drafters attempted to narrowly define “primary care” to exclude specialists and concierge practices. Unfortunately, they tied it to the ACA’s definition of primary care, which was originally intended to define eligibility for bonus payments to PCPs, not as a comprehensive definition of primary care. Most primary care practices today would fall outside that definition. DPC agreements could only include services represented by codes for “evaluation and management” office visits (CPT 99211-5). That means that Pap tests, wellness exams, simple in-office testing, strep tests, urinalysis, EKGs or any office-based procedures would need to be excluded. It is precisely the bundling of those value-added services that gives DPC the cost advantage that employers are looking to harness. The bill fixes the wrong Internal

Revenue Code (IRC). Instead of making DPC an eligible health care expense under IRC 213(d), it makes DPC an exempted health plan under IRC 223(d). That creates conflict in the 25 states that passed legislation declaring DPC is not a health plan. It also gives insurance commissioners, in the states without DPC laws, opportunity to regulate DPC as health insurance. The bill goes on to cap DPC charges at $150 per month. While that price point may be palatable for most, it establishes the first-ever legislated caps on physician fees. There is irony that the national leaders in price transparency are the first ones met with federal price caps. HR6199 also precludes DPC practices from including prescription medications other than vaccines. Bill drafters were unclear if that means practices cannot dispense medications, cannot accept HSA dollars for them, or can’t include them in the contract. There was success in removing the restrictive primary care definition and CPT coding requirements prior to House passage. HR6199 is now awaiting action in the Senate. We are hopeful that it will move following mid-terms and we will continue to work with lawmakers to correct these flaws. We look forward to celebrating passage of a good HSA DPC bill. USHealthMedia.com | Vol. I | Issue 3


F R E E M A R K E T M Y T H V. FA C T

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MYTH: I must use a carrier as my Third-Party Administrator.

known starting point. The final amount after the discount is not based upon a fair market value price, a reasonable price, or any knowable number. No one would willingly buy a vehicle with a price that is 60% discounted unless they knew the final amount that would be charged. The same should apply with non-emergency healthcare services. Additionally, PPO networks not only charge an access fee to the employer, but they also skim off the discount itself. For example, the facility or physician will agree to a 60% discount, BUT the network shows the employer a 50% discount, keeping 10% for themselves.

FACT: You do not need a carrier/ASO to be your TPA. It is common for carriers to convince employer and brokers, that having a carrier (ASO) is almost a prerequisite to having a self-funded plan. However, these carriers are often not working in the best interest of the employer. Since ASOs often require the use of their networks, PBMs, stop loss coverage, out-of-network negotiations, and other services, an employer is often kept in the dark about the funneling or usage of their claims funds. When using an ASO for all the various services they offer, the employer is also PAOLI HOSPITAL 255 WEST LANCASTER AVENUE unaware of the ASO’s true total comPAOLI, PA 13901 pensation. When you are self-funded, you want Please check box is address is incorrect or insurance information has changed, and indicate change(s) on reverse side. an administrator that works in the best PATIENT NAME ACCOUNT NUMBER XXXXX interest of you and your plan. In fact, it GUARANTOR is your duty under ERISA to be able to prove that plan assets have only been used in a reasonable way. Your TPA is Self-Pay No Insurance valuable only when they work for the exclusive benefit of the self-funded PAOLI HOSPITAL 255 WEST LANCASTER AVENUE Plan. PAOLI, PA 13901 MYTH: I have to have a comprehensive PPO network with good discounts. FACT: Discounts are an illusion. PPO discounts are an illusory shell game. A discount off what? The answer is that it is a discount off an unUSHealthMedia.com | Vol. I | Issue 3

Pay online: mainlinehealth.org/patientbilling MASTERCARD CARD NUMBER SIGNATURE

VISA

DISCOVER CVV CODE

AMEX AMOUNT EXP. DATE

CARDHOLDER NAME (PLEASE PRINT)

ADMISSION DATE 07-02-16

DISCHARGE DATE

AMOUNT DUE $1,000.00

PAYMENT DUE UPON RECEIPT

STATEMENT DATE 09-19-16

ENTER AMOUNT PAID

MAKE CHECKS PAYABLE TO AND REMIT TO: PAOLI HOSPITAL PATIENT PAYMENTS PATIENT PAYMENTS P.O. BOX 784876 PHILADELPHIA, PA 19178-4876

Pay online: mainlinehealth.org/patientbilling MASTERCARD CARD NUMBER SIGNATURE

VISA

DISCOVER CVV CODE

AMEX AMOUNT EXP. DATE

CARDHOLDER NAME (PLEASE PRINT)

Please check box is address is incorrect or insurance information has changed, and indicate change(s) on reverse side.

PATIENT NAME

ACCOUNT NUMBER XXXXX

GUARANTOR

DiscountedAetna Member CostCost Discounted Member

ADMISSION DATE 07-02-16

DISCHARGE DATE

AMOUNT DUE $1,752.80

PAYMENT DUE UPON RECEIPT

STATEMENT DATE 12-12-16

ENTER AMOUNT PAID

MAKE CHECKS PAYABLE TO AND REMIT TO: PAOLI HOSPITAL PATIENT PAYMENTS PATIENT PAYMENTS P.O. BOX 784876 PHILADELPHIA, PA 19178-4876

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F R E E M A R K E T M Y T H V. FA C T

30

To add insult to injury, the contracts negotiated with providers are proprietary and confidential, leaving the employer in the dark about what their plan has agreed to pay, how to pay it, or any of the other terms. Many providers charge a lower total charge if they believe the patient does not have coverage. When they are informed of existing coverage, their bill is modified to show a much higher billed charge, the agreed upon discount, and then the final amount owed. (See illustration, previous page). The patient is then responsible for a higher cost than if they had just paid cash! The pressure to keep a specific provider “in-network” so that the patient does not have to discuss cost is powerful. But discounts rarely do the patient any more favors than they do your plan. There are thousands of Sellers not participating in a network who willingly accept a reasonable reimbursement. It is more efficient to not deal with claims filing requirements, incorrect payment issues, and multiple agreements.

MYTH: My overhead is high, so you must pay more. My reimbursement from a carrier or Medicare is too low, so you will have to pay more. The “free market” has siphoned patients out of my managed care contract, so you will have to pay more. FACT: These issues are NEVER the Buyer’s problem. The inability to compete for customers should never be used as a justification for overcharging your benefit plan. If their overhead is too high, it is their responsibility to bring their costs under control. The Buyer is under no obligation to pay higher charges to bring a Seller into the black when they have willingly signed adverse contracts with other plans or programs. If a free market program is causing patients to seek out an alternative provider, it is up to the seller to offer services and/or pricing to retain these patients.

OVER THE PAST TWO DECADES, THE INFLATION-ADJUSTED PRICE OF COSMETIC SURGERY HAS DROPPED, NOT INCREASED. COSMETIC SURGERY IS ONE OF THE FEW MEDICAL PROCEDURES WHERE PATIENTS PAY OUT-OF-POCKET AND DOCTORS COMPETE FOR BUSINESS.

INDEPENDENT PHYSICIANS ARE ABLE TO STAY INDEPENDENT AND WORK FOR THEIR PATIENTS. THERE IS NO CONFLICT OF INTEREST BETWEEN PATIENT NEEDS, HOSPITAL EMPLOYER CONTRACTS/ QUOTAS, OR INSURANCE COMPANY RULES.

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USHealthMedia.com | Vol. I | Issue 3


Joining the Revolution in Illinois

• • • •

ILLINOIS FMMA CHAPTER CONFERENCE

31

The Illinois Chapter of FMMA recently hosted their first chapter conference. Keynote speakers included FMMA founders Dr. Keith Smith and Jay Kempton who exposed Healthcare Myths v. Facts. Panel discussions during this day-long event included: The Impact of Transparency for Pricing & Quality HR Onboarding & Employee Engagement Facilitators-Captives, TPAs & Brokers Free Market Medicine from a Buyer’s Perspective

The event drew more than 100 participants who were inspired and fired up to be part of the Free Market community and collaborate with fellow members to create solutions. Panel speakers included: • Richard Kube, MD - Prairie Spine & Pain Institute • Brian Erdmann, MD - Priority Medical Partners • Suzanne Webb - Exclusive Surgeries Solutions • Mike Kovaleski - BeneTrust • David West - Group & Pension Administrators • Michael Scott - Allison & Mosby-Scott • Rob Waldo - Samaritan Ministries • William Lacy - ACHRM • Jim Baxter - Teachers Coalition on Health • Jory Zunich - Solarte Health • Sonny DeRama - We Care TLC • Mike O’Neil - Healthcare Bluebook PHOTOS FROM TOP: DAVID WEST, MICHAEL SCOTT, JAY KEMPTON • JIM BAXTER, WILLIAM LACY, ROB WALDO • PAUL BRODERS • DR. RICHARD KUBE • SUZANNE WEBB • JIM BAXTER

USHealthMedia.com | Vol. I | Issue 3

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PILLARS OF THE FMMA

FMMA PILLARS

32

• PRICE is NOT a product. CARE is the product.

PRICE

• Selling access to pricing is anti-free-market. • Vendors and third parties whose compensation is based on selling “savings” or “access” are not the solution.

Percentage-based payment models incentivize price gouging and pricing games. Compensation based on a percentage of savings, claims or premiums where the third party WINS when the cost is high, puts the vendor at odds with the best interest of their clients.

• VALUE is established when the buyer and seller agree on a FULLY DISCLOSED, mutually beneficial price for care.

VALUE

• If a vendor adds or changes that price in ANY WAY, those amounts should be truthfully disclosed. • Vendors and third parties whose compensation is based on selling “savings” or “access” are not the solution.

Value is based on Price and Quality. A consumer cannot determine the VALUE of the purchasing choices they make without price HONESTY. In an open free market, consumers would be able to readily access the information to choose healthcare providers based on Value.

• PRICE EQUALITY is the basis of a free market.

EQUALITY

• Cash is king. • Any willing buyer should be offered the same price regardless of any factor.

In an open and honest free market, cash is always king. Enhanced discounts for guaranteed bodies through the door, increases costs for patients based on factors they cannot control; such as one insurance v. another, these are all symptoms of a broken system. In a free market system, a competitive price can be knowable, publishable and complete regardless of the patient, the health plan, the employer, or any other factor.

TRANSPARENCY PROVIDES SELF-FUNDED EMPLOYERS AND INDIVIDUAL PATIENTS WITH THE INFORMATION AND THE INCENTIVE TO CHOOSE HEALTHCARE PROVIDERS BASED ON VALUE, WHICH INCLUDES PRICE AND QUALITY.

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USHealthMedia.com | Vol. I | Issue 3


free market medical association

CHAPTER DIRECTORY

To learn more about FMMA Local Chapters, visit FMMA.org/ Local-chapters

F M M A C H A P T E R D I R E C TO R Y

33

CAROLINAS

NORTH AND SOUTH CHAPTER MICHIGAN Dr. Shane Purcell MICHIGAN CHAPTER carolinas@fmma.org Theresa McIntosh Dr. Roland Tindle FLORIDA michigan@fmma.org FLORIDA CHAPTER michigan fmma Chris Markford florida@fmma.org

FLORIDA SW CHAPTER Dr. Raymond Kordonowy Dr. Sunil Lalla floridasw@fmma.org flswFMMA

GEORGIA

GEORGIA CHAPTER Dr. Robert Nelson georgia@fmma.org georgiaFMMA

ILLINOIS

ILLINOIS CHAPTER Colleen Ingraham illinois@fmma.org illinoisFMMA

MASSACHUSETTS

MASSACHUSETTS CHAPTER Dr. Jeffrey Gold, massachusetts@fmma.org massachusettsFMMA

MINNESOTA

MINNESOTA CHAPTER Merlin Brown, MD minnesota@fmma.org mnFMMA

MISSISSIPPI

MISSISSIPPI CHAPTER Micah Walker, M.D. Becky Russell mississippi@fmma.org

MISSOURI

MISSOURI CHAPTER Dr. Joseph Costello missouri@fmma.org missouriFMMA

NEBRASKA

NEBRASKA CHAPTER Pete Larson nebraska@fmma.org nebraskaFMMA

USHealthMedia.com | Vol. I | Issue 3

OKLAHOMA

OKLAHOMA CITY (FOUNDING) CHAPTER Sharon Hodnett okc@fmma.org oklahoma fmma TULSA CHAPTER Paul Mackey tulsa@fmma.org tulsaFMMA

OHIO

OHIO CHAPTER

Dr. Louis Flaspohler ohio@fmma.org

OREGON

OREGON CHAPTER Jack Brown oregon@fmma.org oregonFMMA

PENNSYLVANIA

PENNSYLVANIA CHAPTER Dr. Nicholas Pandelidis pennsylvania@fmma.org

TEXAS

AUSTIN CHAPTER Sean Kelley austin@fmma.org Austin.FMMA DALLAS CHAPTER Bret Brummitt dallas@fmma.org HOUSTON CHAPTER Dr. Bhavana Rao houston@fmma.org houFMMA

VIRGINIA

VIRGINIA CHAPTER Dr. Jordan Hackworth virginia@fmma.orgÂ

WISCONSIN

WISCONSIN CHAPTER Dr. Kevin Tadych wisconsin@fmma.org

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WHY BE INVOLVED IN A LOCAL FMMA CHAPTER?

W H Y B E I N V O LV E D

34

Local chapters of the Free Market Medical Association connect you with like-minded employers, physicians, facilities, industry experts, and experts in your own community. Local chapter groups help facilitate and implement strategies, ideals, and goals important to you. Bringing buyers and sellers of health care goods and services together to strategize, identify, and implement solutions is ground-breaking and paradigm shifting. For too long, third party vendors have kept two of the biggest stakeholders in our healthcare system apart—the providers, and the employers. Both sides recognize that the only way for providers to provide the highest value, and employers to offer comprehensive benefits without runaway healthcare costs, is to work together to advocate for change. Your local chapter connects you with free marketfriendly providers who have embraced transparent pricing and quality. FMMA member physicians and facilities understand helping your business succeed is an essential part of keeping the local community strong, and helps them succeed!

What should you expect? Amazing conversation, new friends, expanded resources, and maybe some answers and solutions. Your chapter may meet monthly over lunch at a local business, or may choose to meet regularly by video chat or conference call, and only meet in person every quarter. Each local chapter has its own schedule and topics based on what is best for the participating members, but the relationships formed are beneficial across the board. Don’t have a local chapter in your area? You can start one! Starting a local chapter is easier than you think— simply talk to the FMMA staff, fill out some paperwork, then invite anyone you know to sit down and have a conversation. Chapters grow steadily over time as attendees invite someone they know to the next meeting. The FMMA currently has 20 local chapters, and more than 300 members in 33 states. You may have free market warriors in your own back yard! Join the FMMA and support or start a local chapter. FMMA.org/local-chapters/


2018-19 PUBLICATION SCHEDULE ISSUE DATE

CLOSE DATE

February 2019

Jan 10. 2019

April 2019

Mar 7, 2019

June 2019

May 2, 2019

August 2019

July 11, 2019

October 2019

Sept 13, 2019

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Who reads Free Market Healthcare Solutions? The printed magazine has an average annual distribution of 15,000 per issue and is delivered by mail to C-level executives, industry related affiliates, DPCs, and FMMA members in the key markets across the U.S.

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